Radar plunges to US$49m loss

Business Reporter
CONSTRUCTION group Radar Holdings plunged to a US$49 million loss for the year ended June 30 2013 after disposing of its 51 percent controlling interest in Border Timbers Limited to focus on its core business.
Revenue came in at US$9,2 million from US$8,2 million in the same period last year with the loss from continuing operations only worsening to US$2,2 million from a US$736 annual profit in 2012, but a US$47 million loss on disposal of Border Timbers Limited inflated the loss.

The decline in profits to US$2,2 million from continuing operations was a result of a 23 percent increase in net finance charges to US$937 000.

Radar Holdings owned 22 005 087 ordinary shares in Zimbabwe Stock Exchange- listed timber group Border Timbers, but
distributed its interest in Border Timbers in May this year through a dividend in specie.
However, Radar contends that its shareholders did not suffer a loss in real terms since they received shares in Border Timbers at individual level.

In that regard, Radar said the US$46,9 million loss from discontinued operations represents the transfer of value of Border Timbers from the group.

“None of the shareholders of the group suffered any loss as a result of the transaction as they continue to own the same shares in the two groups.”

At Radar Holdings consolidation level, Border Timbers was accounted for at net asset value while the distribution specie (shares instead of the cash equivalent of their value) was accounted for at the latter’s market value.

The disposal of Border Timbers resulted in the group’s total assets decreasing from US$174 million in 2012 full year to only US$21,5 million.
Radar Holdings directors believe that the demerger of Border Timbers was necessary given the differing financial needs and sectoral focuses.

“In the board’s opinion, the demerger of Border Timbers Limited will position Radar Holdings Limited as a purely construction group.
“This will allow Radar Holdings Limited to build on already positive performance achieved by the company in the construction sector,” Radar said.

Looking at segmental performance Radar said turnover at Macdonald Bricks increased by 11 percent to US$9,1 million in the period under review on the back of an increase in sales volumes as well as a better product mix. Sales rose by 12 percent driven increased construction activity.

Rental income at Radar Properties declined by 14 percent from US$155 911 to US$134 405 due to below market rentals and high tenant default rate while occupants dropped from 62 percent in 2012 to 58 percent.